You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machines base price is $10,800.00, and it would cost another $2,900.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after three years for $1,750.00. The machine would require an increase in net working capital (inventory) of $890.00. The new machine would not change revenues, but it is expected to save the firm $39,955.00 per year in before-tax operating costs, mainly labor. XYZ's marginal tax rate is 39.00%. If the project's cost of capital is 12.25%, what is the NPV of the project?

$10,800.00

$49,392.97

$13,700.00

$40,996.16

$26,747.51